How to Enjoy the Preferential Corporate Income Tax in Hetao?
The standard corporate income tax rate in China is 25%. But enterprises established in the designated closed area of the Shenzhen Park of Hetao Shenzhen-Hong Kong Science and Technology Innovation Cooperation Zone and qualified for the relevant conditions may enjoy a reduced corporate income tax rate of 15%.
Not all the enterprises registered in Hetao can enjoy the reduced corporate income tax rate of 15%. Blindly following the trend to investment and establish companies or enterprises in Hetao is not advisable. In order to enjoy the preferential corporate income tax rate in Hetao, investors should self-assess if the following conditions can be satisfied before deciding to establish a company or enterprise in Hetao:
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Whether the company or enterprise mainly engages in the business sectors specified in the Catalogue of Preferential Corporate Income Tax in the Shenzhen Park of the Hetao Shenzhen-Hong Kong Science and Technology Innovation Cooperation Zone, and its core business income accounts for at least 60% of its total income.
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Whether the registered address of the company or enterprise is located in the designated closed area of the Shenzhen Park of Hetao Shenzhen-Hong Kong Science and Technology Innovation Cooperation Zone, i.e. the area of the Futian Boned Zone, starting from the Huanggang Port in the east, the Shenzhen River in the south, the Xinzhou River in the west, and Ronghua Road in the north.
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Whether the company or enterprise meets the conditions for substantial operation in the designated closed area of the Shenzhen Park of Hetao Shenzhen-Hong Kong Science and Technology Innovation Cooperation Zone. Substantial operation in the designated closed area of Hetao requires that the production and/or operation, personnel, finance and property of the company are all located in the designated closed area of Hetao. If a company or enterprise is registered in the designated closed area of Hetao only, whose production and/or operation, personnel, finance or property are not located in the designated closed area of Hetao, it will not be considered to have substantial operation in the designated closed area of Hetao and thus cannot enjoy the reduced corporate income tax rate of 15%.
If a company or enterprise determines that it is qualified to enjoy the preferential corporate income tax after self-assessment, it may declare and enjoy the tax benefits during the quarterly corporate income tax filings and annual corporate income tax reconciliation.
Companies or enterprises that have claimed to enjoy the preferential corporate income tax must properly retain the relevant materials supporting their substantial operation in the designated closed area of Hetao, the corresponding contracts for income derived from their core business, and so on for post-filing inspections from the competent tax authority.
KAIZEN Group is equipped with experienced and highly qualified professional consultants and is therefore well positioned to provide professional advices and services in respect of the formation and registration of company, application for various business licences and permits, company compliance, tax planning, audit and accounting in China. Please call and talk to our professional consultants for details.
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